GrainCo News

Wednesday, 23 May 2018

Within its pages you will hear about GrainCo's care to ensure that our seed quality continues to exceed industry standards and remains proudly black grass free. In addition find out about the dates for your local GrainCo variety demonstration sites, which range this year from North Yorkshire to Fife in Scotland.

You can find the latest variety information on all of the leading wheat, barley and oilseed rape varieties, including Clearfield, seed treatments and fertiliser timings.

·US weekly export sales of 985k (corn) 195k
(wheat) - further illustrating the lack of demand for US wheat at current
levels.

WEATHER/CROP
DEVELOPMENT

·US HRW forecast return to drier conditions after
showers last week. Forward forecasts at present suggest below normal rainfall
for much of the Southern Plains.

·US Corn planting believed to be circa 75%
complete, marginally behind the average for this time of year. Forecast suggested
scattered light showers in parts.

·Canadian Prairie’s remain largely dry, though
Western areas may receive some rainfall this week.

·Southern Ukraine/Russia remain dry but are
forecast for some rains. Russian spring wheat plantings continue to progress
slowly, though better conditions forecast for the next 2 weeks should boost
progress.

·EU crop conditions largely unthreatening after
better rains last week. Forward forecasts also imply more normal conditions for
this time of year.

·France AgriMer suggest corn planting progress at
86% complete

BOTTOM LINE:

·Markets consolidate following on from the circa
50c sell-off in CBOT wheat of the last few weeks, with weather/politics
supporting the rally. Weather continues to principally dictate direction and in
spite of improved weather outlooks in some areas of concern, issues in some
parts of Aus/Can/FSU/US remain unresolved.

·That said, old crop Global wheat stocks are
burdensome and US funds have significantly reduced shorts in wheat, also
building a significant long in corn - removing some underlying technical support.

·Expect volatile trade to persist, as the weather
outlook continues to occupy much of focus. Geo-political/currency influence
will also remain closely monitored, particularly until there is more clarity
around what the US/China situation will ultimately mean for Ag S&D’s.

Russia and Eastern Europe more generally should also benefit from these rains next week,following on from 2 months of drier than normal weather.

Alberta reports spring wheat seeding progress at 8.7% versus 30% average for this time of year. Australian conditions continue to look dry, with little respite in the forecasts.

BOTTOM LINE:

USDA data featured briefly before market attention quickly returned to weather and crop conditions.

US Corn Belt planting weather appears more favourable than first forecast, whilst rains for US HRW areas, as well EU and FSU this week are expected to boost crop conditions. Presence of the sizeable US fund long in corn may have contributed to selling late in the week.

UK wise, sterling weakness and a tighter wheat carryover into next season continue to provide support. Winter wheat conditions will remain closely monitored as such.

In short, weather continues to be the primary focus, with emphasis on the US/EU/FSU in particular. Traders will also be conscious of potential geo-political/currency developments with US/China trade talks scheduled this week.

·Forecasts for the week suggest light rains are
to be followed by heavier towards Friday, potentially hindering field work.
Prevent plant dates are 2/3 weeks away, so there still appears a good
opportunity for the crop to be planted.

·Kansas Wheat Tour estimated average yields at
37b/a versus 48b/a last year and a 5 year average of 41b/a.

·US winter wheat plantings improved by 1% to 34%
g/e

·US spring wheat planting progress increased from
10% to 30% last week (51% average for this time of year). Forecasts for the
Northern Plains suggest some rains over the next 2 weeks, though not of enough
severity to hinder plantings.

·Argentine Corn harvest delays continue, with wet
weather expected for much of this week. Extended forecast do suggest drier
conditions are upcoming however.

·USDA data due for release on Thursday will be
the next fundamental target for the trade. Risk of consolidation pre-report is
a possibility given the extent of the recent rally, also bearing in mind the
sizeable longs in corn/soybeans.

·That aside, US/FSU weather will likely continue
to be the key drivers day-to-day, with the ongoing US/China trade situation
also likely to be monitored for developments.

Friday, 27 April 2018

Finally, a more settled spell of weather over the last two
weeks has seen a huge amount of activity in our region with farmers desperate
to catch up with drilling, fertiliser application and spraying.Most spring cereal and bean crops on light
and medium bodied land have now been drilled, with only the trickier, heavy
land remaining. I am often asked how late spring barley can be drilled; the
answer completely depends on individual conditions at the time, all I will say
is that many customers I deal with harvested successful spring barley crops in
2016 that weren’t drilled until May.

The last month has also seen an advance in old crop prices.
May’18 feed wheat is currently trading between £154-£156/t, with those willing
to hold on until July/early August likely to make £160/t. This is down largely
to the re-opening of the Vivergo plant in Hull, furthering the demand for feed
wheat in a region already in deficit. Moreover, dwindling on-farm stocks and
the sense that harvest is certainly not approaching quickly is not
incentivising many people to sell.

New-crop is remaining fairly level with values trading at
£144-£146/t and £149-£151/t for harvest and November respectively. Most regular
forward-sellers have likely taken cover at, or near, these values and until
either markets move upwards or crops markedly improve, it is unlikely that many
people will be enticed to sell much new crop at these current levels. Few
growers in the region would at this point imagine they are heading towards a bumper
harvest, especially with the condition spring crops have been drilled in (or
not drilled!). If at least one of Ensus or Vivergo is running throughout the
back-end, demand for feed wheat in the North will remain strong, and so unless
the pound strengthens significantly, values will remain relatively firm.

Old crop feed barley has continued its meteoricrise, now virtually at parity with feed wheat
depending on location, and only £7-£8/t less than full spec milling wheat!
Whether the demand for barley will reduce as farmers turn stock out remains to
be seen over the next few weeks, however with very little left on farm, prices
are unlikely to nose-dive. New crop barley also looks more attractive, with
forward prices £10-£12/t below wheat, but again you would imagine a lot of next
year’s trade will hinge on how well spring barley crops perform.

Oilseed Rape (OSR) continues to be the dog of this marketing
year; old crop values remain at £284-£286/t (depending on location) and are
seemingly range-bound to a maximum of around £290/t. It seems at this point as
though OSR has run its race, with large imports in the winter meeting the
demand from the UK crush. One can never rule out a late rally but it certainly
feels unlikely at the moment. New crop values are equally uninspiring; £286/t
for November, with harvest £10/t less, is hardly likely to induce much
forward-selling at this point.

Fertiliser markets are gearing up for the new season trade
to begin, with prices for AN and Urea expected in the next month. That said,
there are still reasonable old-season offers available for those with
purchasing still to do. Imported AN is some £23/t cheaper than UK product at
the moment, with May delivery at £219/t and NPK products, such as 20.10.10,
still available at £245/t.

French winter wheat reported at 77% good/excellent Warm temps and limited moisture have been boosting spring progress for many parts of the EU.

FSU conditions remain good, with forecast unthreatening for the next few weeks.

Canadian Prairies and US Northern Plains remain snow covered following recent storms, delaying plantings. It’s not believed to be critically late at this stage however.

BOTTOM LINE:

Weather continues to principally shape direction, as US HRW dryness and Corn Belt Planting delays occupy much of the trade focus. Improved weather outlook for both instigated the sell-off last week. Perception remains that if US HRW remains the only crop issue this season, markets will struggle to justify current levels.

That said, markets will trade the story and if Southern Plains dryness persists and Corn-Belt planting delays are exacerbated, then expect markets to remain underpinned.

In short, weather led volatility should be the theme of the next few weeks, with all eyes on US conditions in particular. Geo-politics/currency will continue to be monitored closely however.

Wednesday, 18 April 2018

Markets close mixed, with USDA data largely in line with expectations. Post report, US HRW rain prospects and Corn-Belt planting weather resumed much of the focus.

USDA increase 2017/18 World wheat production by 0.96mmt to 759.75mmt (a new record). World wheat stocks increased by 2.33mmt to 271.22mmt (trade est. 268mmt).

USDA reduce Argentine corn production by 3mmt to 33mmt, with Brazilian output reduced by 2.5mmt to 92.5mmt (largely in line with trade - though some private estimates still suggest more downgrades may be required).

US funds estimated net short 75.2k wheat, long 199k (corn) and 143k (soybeans).

US corn planting progress continues to be slow with trade estimates around 5% complete. Forecasts for the next 2 weeks suggest the cold, wet weather is set to continue, likely further delaying plantings. Circa 35% would be planted by 1st May in a normal year.

Northern Plains continue to suffer from cold conditions with heavy snowfall in areas.

Ukrainian/Russian spring plantings behind normal, though a drier week last week and limited rainfall expected this week should help improve planting progress.

Canadian Prairies forecast for cold/wet conditions over the next few weeks, likely hindering planting progress.

Cold, wet conditions persist across much of the UK, increasing yield and quality risks for both winter and spring crops as field work is further delayed. Increasingly important that hotter, drier forecasts for the second half of this week materialise.

BOTTOM LINE:

Routine USDA data released on Tuesday does little to change the broader outlook, as markets quickly returned to trading weather (predominantly US). Forecasts for widespread rains across the HRW-Belt continues to add pressure to wheat markets, whilst plentiful Global stocks of old crop wheat/corn continue to hang over the trade.

Sentiment remains that another major production issue in one of the Worlds key growing areas will be needed to justify a sustained rally from this point. Expect US/SA weather to largely shape direction day-to-day, though with ongoing geo-political issues in Syria/US/China – risk remains that external markets weigh into commodities, if any of these situations were to escalate.